PEIA Director briefs Legislature’s Select Committee

Executive Director Richard Stevens represented WVPA at the WV Legislature’s Select Committee on PEIA today at the Capitol. Ted Cheatham, PEIA Director, spent almost one hour briefing Senators and Delegates on the current situation with the health benefit plan for the 220,000 persons.

Cheatham informed lawmakers that the PEIA Finance Board approved a $2,700 increase for each of the health insurance plan’s 10 salary-based premium tiers to prevent a hike in premiums for state employees (teachers, school service personal and state government employees) who will soon receive a five percent raise. He said about 14,000 government employees could have been at risk for higher premiums had the adjustments not been made, explaining the higher salary increase would place individuals into a higher tier thus costing them higher premiums. The increased tier is to cost an additional $3 million to $5 million. Legislation following the teacher’s strike during the legislative session earlier this year means state employees are to receive a five percent raise on July 1.

Cheatham said as of April 30 of this fiscal year, PEIA has a surplus of about $35.5 million. Next year, that surplus is expected to $71 million, according to Cheatham.

He informed the Committee that 21 meetings had been held around the state to hear concerns from insureds and retirees. He reported PEIA pays 70% of a hospital and other providers charges if a PEIA insured goes to an out-of-state hospital or medical facility, compared to 80% if they state in-state.

Cheatham said drug costs are most expensive benefit, and the fastest growing expense. He said changes in drug plans, which some insureds complain about, are changed every six months. He said insureds complain about having to pay two copays for a ninety-day supply, instead of only one copay for 30 days. But, according to the PEIA director, the 90-day supply has reduced the agency’s costs by $12 million in less than a year.

He said the agency will begin an electronic diabetic prevention program proposed by the CDC this Fall. Another change forthcoming is a new contractor for the “prior authorization” program now administered by Health Smart. He said three companies have submitted bids for the contract.

When it comes to finances, the agency is $35 million ahead because enrollment is down by 3,000 people, and drug rebates have increased.

Questioned by Senator Charles Clements (R-Wetzel), Cheatham said a $71 million surplus is expected next year to pay claims which will result in the agency not asking for premium increases by state employees and not asking the legislature for increased funding.

When Senator Ed Gaunch (R-Kanawha) asked Cheatham what was so important about PEIA wanting to pay for only instate services, Cheatham said PEIA sets its reimbursement rates at the State’s Medicaid level for in-state providers, which can be as low as 30 percent of charges. He said if a provider accepts PEIA patients, they cannot balance bill the patients. When asked by Senator Mike Azinger (R-Wood) if a provider can turn down a PEIA insured, Cheatham said “yes.”

Cheatham went on to say consideration had been given to setting up a primary care clinic near the Capitol for employees and their families, similar to the clinic set up a few years ago by the City of Charleston and proved successful. He said such a clinic would have included exercise facilities and a mini-pharmacy, but plans were dropped after another agency took the space over.